Saturday, April 12, 2014

Game Center Kickstarter

Part of managing our Game Center expansion is the necessity of putting quite a few carts before their prospective horses. You have to pay architects many thousands of dollars before we can learn if we can actually afford the project. We need to apply for a loan to pay the architects before we know if any of this is viable. We need to begin planning our design and testing things like new chairs before we pull the trigger on buying over a hundred of them. So I can say with some certainty that we're planning to add a Kickstarter component to our Game Center expansion.

The Game Center expansion is actually an ideal Kickstarter project. Unlike asking you to get our store off the ground, adding furniture, fixtures or equipment (known as FFE), or acquiring inventory, the Game Center is not an asset we will own. The expansion of the Game Center is a tenant improvement, so it's adding value to someone else's property, and since we lease our space, it's not ours. It's instead an impermanent addition to Black Diamond Games that will be used by the community for as long as our business is in that location. So it makes sense to attempt to "share the load" on the project. Plus, with Kickstarter, the project can be better.

We're severely cost constrained on this project, since I need to demonstrate it will give us a solid return on investment (ROI) and there's only so much of a loan we can afford to acquire. It's a very expensive project already, with architectural and engineering costs approaching new BMW territory. Believe me, sometimes I wonder if a new BMW would be a better decision. I suppose you should know that with this project, I won't be driving a BMW, and in fact I'm putting up my cars as collateral. I've got quite a bit of skin in this game.

This project will strengthen the community focus of our store. It will allow more events, bigger events, special events. Since we've been thinking about this for years, I can say with certainty that expanding our Game Center is the right decision.

When we add a Kickstarter component to the mix, it does several things. First, it provides a a buffer for unexpected eventualities. I've managed projects before. Heck, I was a project manager. However, problems arise, and under our current budget, fixing problems will cause pain to the store.We can endure a good amount of pain, but it adds risk. Kickstarter allows the project to proceed with a cost buffer, in case of problems.

Second, Kickstarter allows us to take a step back from the ROI. It allows us to shoot for the moon, if people will share the dream with us. For example, we can purchase tables and chairs of a higher caliber, rather than disposable "Lifetime" Costco chairs that are hard to clean. We can integrate electronics to help us manage events. We can introduce "privacy curtains" for member areas (that's a new thing). We can put in better flooring that's both easy to clean and comfortable to stand on. We can generally expand the project planning to be of a more premium caliber. So the Kickstarter both ensures the project happens and makes it significantly better.

This week we were approved for our loan by Opportunity Fund, a California microfinance lender that helps community based small businesses. It turns out banks still turn down the majority of businesses that apply for loans, and this non profit has stepped in to help us.

Next week we hope to have the architects basic deliverable for the contractor. But now? Now we move forward knowing that with a Kickstarter component, this is going to happen one way or another. There are still many variables. Costs are still being determined. Negotiations with our property manager will need to ensure our lease is extended past our loan date. The city has to approve the final plans, although we're very strongly front loading that with proper project planning with the architects. Kickstarter? Kickstarter can be both a project guarantee, a project enhancement, and a vote of support from our community.

With that vote of support will come perks. We're still working out the details. Besides various forms of acknowledgement, we're planning on implementing a gym membership model for our Kickstarter supporters. Imagine a reserved, "premium" area where you can play the games you want, when you want, and if we can do it, the aforementioned privacy curtains to cut down on noise and distractions. We're also considering commissioning a project or two from the publisher community. Imagine a custom Pathfinder adventure from a well known author with a Black Diamond theme, available only to Kickstarter supporters.

We're also looking for ideas to allow publishers and possibly distributors to participate. Sponsorship of various sorts will be available and a wall of prominently displayed logos or even framed posters is likely going to be part of this.

We're still brainstorming this area, so if you have ideas of your own, please share them below. For the most part though, you get to help us help our community by expanding their space. Also, I want to ask you to please spread the word that this is coming. Let your friends know it's on the way. Kickstarter is all or nothing, and awareness that this is on the horizon would help our cause tremendously. Thanks!

27 comments:

I think doing a swag option really appeals. Even something simple like a set of dice with the black diamond logo/colors as a 20 option. Shipping not included etc. But stuff like that does become time consuming and involves another cost element. If you were considering rewards goods anyway, that would be a great idea too add, imo.

Honestly this is something I've been greatly looking for in BDG for some years now. Organized play events like D&D Encounters is nice and all but it would be great to be able to come in and have custom run games. So when are you putting it on Kickstarter so you cant take my pledge?

Thats an amazing idea gary, but its not just the space its also the service you give. you have great people that works at BDG, others not so much. You need to keep a close eye to costumer service, attention to potential clients good attitude and selling skills, plus of course a new and improved space, sounds like a good mix for a succesful business plan. Its a huge enterprise that will cost a lot of money but im sure it will pay off, but never forget about the most important part of your business, your clientel. Doesnt matter if its warhammer 40k, fantasy, warmachine, d&d, magic, yugioh, board games, every costumer that goes to your store to spend their money at BDG, deserves good costumer service and attention.

It's very heartening to see BDG and Endgame in Oakland making expansions intended to build their gaming communities. Although I find I have less and less time for gaming, I'm with you in spirit and will pledge something as a well wisher with little prospect of benefiting. Wishing you every success!!

Thanks! Some early research found that only about 20% of our customers used our game space, but a far larger percentage found it to be a critical feature for our business, enough that some said they would only shop with us with it. I believe it's true that the game trade grows and survives because of in store play.

You've probably already thought of this, but you may want to hire a consultant to manage the kickstarter. Those campaigns are HUGE time sinks, and can easily end badly unless you have some experience managing them. Not to mention that you're probably going to have a pretty hefty base goal in order for it to even matter, and while kickstarter is national only local people will really get anything out of it (other than a few sympathetic ears here and there). All I'm saying is that kickstarter is also a risk, as I'm sure you know. But best of luck all the same! I really hope it works out for you.

The first thing I did was delegate this to my manager, who knows way more about the inner workings of Kickstarter. I'm making this his job for a while and giving him the resources he needs. We considered a consultant and may still go that route.

I would definitely help to support the cause. Though I moved away from the area I always frequented your shop and always enjoyed the atmosphere and gamers alike. This would definitely be something worth seeing in full effect.

Have you guys investigated moving the shop to a new location? Many times a Landlord with an empty space will give a Tenant Allowance to a new tenant in order to make the move in less painful... Depending on the space this can be as little as $5 per leased square foot or up to $40 per leased square foot. Seems like if you were to move to a location which was an empty box it might be all around cheaper and easier to start from scratch.

In terms of the Kickstarter, i think its a good idea. You really hit the nail on the head; its investing in your own community and weekend time. Makes a whole lot of sense.

The advantage of building it is we don't have pay rent on the extra square footage. The disadvantage is we pay a construction loan equivalent for years after the build out. The goal then is to get beyond that loan period where the project becomes profitable, where if we were to rent out a larger space, we would be saddled with that extra expense pretty much forever.

This goes back to the Magic bubble issue. If the game trade is on a permanent up swing, by all means, get a bigger space. But if it's a bubble, a one time expansion project with limited long term liability makes more sense.

All that said, the project is still in development and if it becomes too costly, a bigger space or even second store might make more sense. The second store is something I really don't want to do. It's probably a more financially saavy option, but I in no way want to manage multiple stores.

I agree with the second store; I dont think you want to split your community. One thing that is great about the store is the cross-pollination of games; someone from Warmachine talking to people in Warhammer; etc.

As for the loans, wouldn't it be more financable (although sounds like you already secured the money) to show a brand new 10 year lease rather than a shorter lease? I do understand what you were saying about the additions sq ft and not having to pay for the mezz space, but I was just thinking that it has to be very expensive to do the necessary ADA/fire/earthquake upgrades to make it work. As i said, from an outside perspective, seems like it would be easier to just start from a new space.

Have you ever considered partnering up with Phoenix Games on Treat? You would be two extremely complimentary tenants to a larger space, which you could negotiate together and pay a lower PSF as larger spaces typically have lower PSF rent. Their pinball tournaments would bring you guys some exposure and your tournaments would undoubtedly help their business. Put a pizza shop inbetween both stores and you got yourself a nice little operation!

A typical lease in our class of space is usually 5 years, so it's not exactly short term. Going longer is certainly a possibility, if negotiations warrant. I don't want to talk too much about that until it's done.

Moving is hard. There are a lot of unknowns when you move and many stores don't survive the process. When we moved to our current location, we spent $10,000 on advertising and still spent years rebuilding our customer base. Then again, it may be a possibility if we can't work out what we need from our property manager.

I'd love to chat with you more about this if you are interested... I am a landlord rep in the area and I could give you a piece of advice here or there to help you out (simply because i'm vested in your store; no financial gain involved). Shoot me a direct message if you are open to the idea!

We brought in some of the portable convention center type walls from ScreenFlex and that helped carve out private space and deaden more noise. They were expensive, but so far have proved their worth. Plus, the flexibility of moving them around where we need them has been great.